Most definitely; it's better to lose half a percent than to lose a whole percent. But the broader point is that YTD is a stupid way to measure performance. It starts out really stupid, then by the end of the year it's almost not stupid any more, and then it resets to being really stupid again. Learn not to anchor you must...

Most definitely; it's better to lose half a percent than to lose a whole percent. But the broader point is that YTD is a stupid way to measure performance. It starts out really stupid, then by the end of the year it's almost not stupid any more, and then it resets to being really stupid again. Learn not to anchor you must...

I'm really still not getting the point here even after reading this. Is this specific to bonds? How/why does YTD go down, then up again in a year?

If anyone plays QuizUp... an online, real-time, one-on-one, rapidfire trivia-quiz game... then you know... it's kind of cool playing near the beginning of the year. In the first few hours of the year there are not very many people playing, and it will pop up a cheerful announcement that you are #1 in the world. Gradually over time more people join in, and eventually the serious players start, and you get knocked down to #1 in the U.S., #1 in the state, top ten in the state... and you realize that your 2,168 points, which once made you #1 in the world, are no longer very competitive against players with 152,889 points.

Still it is interesting to see different attitudes toward how to measure portfolio growth or return, attitudes about whether that is important to know, and the differences flowing from asset allocation.

"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link:Getting Started

Still it is interesting to see different attitudes toward how to measure portfolio growth or return, attitudes about whether that is important to know, and the differences flowing from asset allocation.

When I checked, it was 1729, so you may consider yours one of the 29 if it helps your self image. We're all here for ya, man.

Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Even better: For folks who waited to rebalance from equities to bonds since the beginning of the year their money they are moving has gained 4+% in 2018 and will end up about 0.5% better than the bond fund it is going into, so that will probably be like having twice the 2018 return of money already in the bond fund.

You could say we have experienced a mini crash in bonds. Well, more like a tiny crash; make that a minuscule crash. Anyway, I'm buying more bonds simply because I'm getting older and gliding towards a higher bond portfolio, so a crash is a good thing just like when stock crashes are good for young buyers who are still accumulating. I guess if you're retired and counting on the bond returns now, you might have a case for panicking, or worrying, or maybe enough concern to keep an eye on things, just in case.

You could say we have experienced a mini crash in bonds. Well, more like a tiny crash; make that a minuscule crash. Anyway, I'm buying more bonds simply because I'm getting older and gliding towards a higher bond portfolio, so a crash is a good thing just like when stock crashes are good for young buyers who are still accumulating. I guess if you're retired and counting on the bond returns now, you might have a case for panicking, or worrying, or maybe enough concern to keep an eye on things, just in case.

As someone who levers their bonds in a risk parity portfolio, bonds have been brutal since September. I'm taking a serious beating at the 2 year point on the yield curve. Happily, equities are being nice and cushioning the blow.

As someone who levers their bonds in a risk parity portfolio, bonds have been brutal since September. I'm taking a serious beating at the 2 year point on the yield curve. Happily, equities are being nice and cushioning the blow.

As someone who levers their bonds in a risk parity portfolio, bonds have been brutal since September. I'm taking a serious beating at the 2 year point on the yield curve. Happily, equities are being nice and cushioning the blow.

I use ZT (US 2 year treasury futures) mainly with some GE (eurodollar futures) and EM (very short term eurodollar futures) to pick up some very short term. I lever these around 10x. I supplement with unlevered BND and TLT to get the longer term end of the curve. The TLT in particular needs no leverage as it's nearly as volatile as equities. I've got TIPS in the mix too.

So levering about 10% equities, 85% short term high quality and 5% long term gives me pretty good parity across the spectrum which I lever to a level where the volatility is similar to a 100% equity portfolio. The leverage adds some cost which I justify as being countered by the increased diversification. I've got some other slice and dice alts in there too, but I don't risk parity those. Rather, I add them in proportional to both their volatility tempered by my lesser confidence in their long term potential (managed futures for instance has a smaller place in my portfolio than a strict risk parity would place it. Currency carry trade even less, and thankfully so so far).

My portfolio has been in place in this form a bit more than a year and has done reasonably well, but has severely underperformed a 60/40 standard because of the screaming hot equity bull run we've had. It hasn't faced a real downturn in anything yet for a good stress test though. I would expect in a severe equity downturn to shine by likely continuing to just carry on with my mediocre but pretty constant growth.

I use ZT (US 2 year treasury futures) mainly with some GE (eurodollar futures) and EM (very short term eurodollar futures) to pick up some very short term. I lever these around 10x. I supplement with unlevered BND and TLT to get the longer term end of the curve. The TLT in particular needs no leverage as it's nearly as volatile as equities. I've got TIPS in the mix too.

So levering about 10% equities, 85% short term high quality and 5% long term gives me pretty good parity across the spectrum which I lever to a level where the volatility is similar to a 100% equity portfolio. The leverage adds some cost which I justify as being countered by the increased diversification. I've got some other slice and dice alts in there too, but I don't risk parity those. Rather, I add them in proportional to both their volatility tempered by my lesser confidence in their long term potential (managed futures for instance has a smaller place in my portfolio than a strict risk parity would place it. Currency carry trade even less, and thankfully so so far).

My portfolio has been in place in this form a bit more than a year and has done reasonably well, but has severely underperformed a 60/40 standard because of the screaming hot equity bull run we've had. It hasn't faced a real downturn in anything yet for a good stress test though. I would expect in a severe equity downturn to shine by likely continuing to just carry on with my mediocre but pretty constant growth.

Thanks for sharing. I'm going to have to read up on this and get back to it. It's not something that's sinking in right away, and I'm confident and content with my goal of simple 3 fund portfolio, so it's not something I'd rush in to anyway. Still, it's a very interesting concept and I hope it works out.